Q: What does the Internet of Things mean for small business?
A: From smart thermostats to cars, the Internet of Things (IoT) is an ecosystem of devices that kicked off Web 3.0. We asked Andy Smith, general partner at Center Electric, a San Francisco-based venture capital firm focused exclusively on investments in IoT startups, to tell us how it will affect small businesses.
What exactly is the Internet of Things?
It’s two things: The first is “smart” connected things, such as a sensor for motion detection or light, a processor and usually a wireless connection to the Internet. Second are the components, software and services to make these things useful. With this integration of devices and analytics, a business will know the best time to run a sale or promotion, add staff hours, improve deliveries or react quickly to external trends.
For instance, a system of sensors like Apple’s iBeacons, which notice who has entered a store, might correlate timely trends, current wait times for cashiers, pricing, merchandising and promotional activities.
How can this benefit the typical small business?
Take the case of a dry cleaner. Garments could be tracked with washable radio-frequency identification (RFID) tags. Tile sensors attached to each garment would prevent loss and notify a customer’s smartphone when their laundry is ready.
IoT tied to a loyalty program in a coffee shop would allow the staff to greet customers by name and know their drink of choice. RFID-based inventory management keeps the shelves stocked, and pressure sensors at the front door could track traffic, occupancy, staffing and even music to reflect the environment of the space.
In an insurance office, files and documents could be tagged to audibly prevent misfiling or loss. The file will tell your smartphone or computer when and where it’s been misfiled.
With so many devices connected to the Internet, what are the security risks?
Hackers could hijack vulnerable IoT devices to block access to a third-party site, but these problems are already commonplace in the PC world today. The same care that you put into protecting your computer systems needs to apply to IoT devices. Your best bet is to have a well-documented manual process that backs up a possible IoT process should something go wrong.
Can I sit out the trend if I don’t want to invest the time and money?
Much like mobile technology, IoT technology is not for everybody, at least not at the outset. But reasons to adapt early include new revenue growth, cost reduction or substantial increases in customer satisfaction. You may also have to embrace it if your vendors and service providers start integrating IoT into their own workflows and expect you to adopt their tech. Since your business should benefit from a vendor adopting IoT, they should prove to you how the technology better serves your needs, not just theirs.